Canadian Frac Sand Plant to Move Forward

Victory Nickel Inc. has received the required approval from the Alberta Energy Regulator to develop the 400,000-tpy Seven Persons frac sand processing facility just southwest of Medicine Hat, Alberta.

AER approval was granted to BG Solutions Inc., the company selling the 7P facility to Victory Nickel. As announced in the company’s news release of Jan. 9, 2013, a payment of $300,000 toward the purchase of the 7P facility has now been made as AER approval was a condition of the purchase.

“The AER approval has huge implications for Victory Silica Ltd.’s plan to begin marketing frac sand in 2013,” said René Galipeau, vice-chairman and CEO of Victory Nickel. “We will now begin the reclamation work and the upgrades at the 7P plant, which are already fully funded, with the goal of generating cash flow before the end of the year.”

“Producing frac sand from the 7P facility is the first step in VSL’s three-phased plan to establish Victory Nickel as a premier frac sand supplier to northern markets, and this will be a very busy summer at the 7P Facility and on the marketing side. Our goal is to complete all work in time to begin processing frac sand before the end of the season,” said CEO Ken Murdock.

Establishing production of premium-quality Midwest frac sand by shipping partially-processed sand purchased in Wisconsin to the 7P for final processing and distribution is the first phase of VSL’s strategy. The 7P facility is well located in an area populated with fracking companies, its customers, and it is within only a few hours’ trucking distance of major oil play well sites.

Phase 2, which includes the construction of a concentrator in Wisconsin, will reduce costs and assure security of sand supply through the control of a frac sand mine in Wisconsin. In Phase 3, Victory Silica has identified a site in Winnipeg, Manitoba, where it plans to build a larger frac sand plant to process and distribute both imported and domestic sands, including sand mined as a co-product of development of a nickel mine at its 100 percent-owned Minago project in Manitoba.

“The 7P facility provides VSL with several competitive advantages,” added Murdock. “First, the lack of well-located, large-volume, manufacturer-controlled dry product storage is a huge issue in the frac sand industry, and the 7P facility already has over 20,000 tons of dry storage capacity. Second, by locating our dry processing and storage facilities close to the wellhead – at the 7P facility and, ultimately, Winnipeg – VSL is able to avoid product degradation from the over-handling that is common in the traditional frac sand supply chain, thereby maximizing the quality of our frac sand products while at the same time minimizing the logistics challenges for our oilfield service company clients involved in the delivery of frac sand to the well.”